Skip to main content

tv   Scotlands Paradise Papers  BBC News  November 7, 2017 9:30pm-10:01pm GMT

9:30 pm
one of the most recognisable buildings in the country. country. it was bought by black stone in 2013 for £190 million. it is one of appleby‘s biggest customers and the law firm was integrally involved in the purchase. the paradise papers laid bear the 11s that black stone, one of the biggest richest companies in the world went to to avoid paying uk the data reveals the confidential report by one of the uk's biggest accountancy firms, deloitte. under the codename project genesis they provide a step by step guide tailor—made to help blackstone avoid tax at every stage of the purges of saint enoch. it starts with a deft swerve of £7.6 million in stamp duty made possible by owning the shopping centre through a jersey property trust. jersey is a crown dependency
9:31 pm
which means it is independent but ultimately the uk is responsible and like several of the uk's overseas territories it is a tax haven. jersey specialises in trusts and there are thousands of them based here. one of the many benefits to holding property in a trust is privacy. it is completely hidden from the public but one of the other main attractions is that they can help companies avoid paying british taxes. the trust we are interested in is operated by something called the st enoch centre trustee company limited which is registered here at appleby‘s jersey operas limited which is registered here at appleby‘sjersey operas and its directors are appleby staff, it is a brass plate companies which means a com plete brass plate companies which means a complete with no obvious economic relationship to a shopping centre in glasgow. so what did the island's leading politicians think about companies using jersey to avoid the
9:32 pm
uk taxman? if there are concerns in the uk about how people are structuring their investment in the united kingdom and then the united kingdom government should change its tax code to deal with it. some companies use companies injersey in a competitive ownership structure. some might say the jersey trusts operate is not transparent. could you not go further? the mud kingdom government and the competent authorities can request information about what is happening injersey wherever they might have a concern and we are at the stage now where that information can be exchanged in as little as an hour. we asked george turner, a tax research and campaigner, to look at the structure. what you have here at the st enoch centre is an economic fiction. the property is owned by a trust in jersey. when the original owner sold the property to blackstone, they were not selling the property itself but they were
9:33 pm
selling an interest in the trust that owns the property and because that owns the property and because that trust is owned offshore, they can avoid stamp duty. so that is seven 01’ can avoid stamp duty. so that is seven or £8 million right from the oft saved. saved or taken. the jersey trust is owned by a series of blackstone luxembourg companies. despite having a major based in london, blackstone has been given non—resident landlord status by hmrc meaning they can collect rental income on the property tax free and send it to luxembourg. the data suggests that could be up to £10 million a year but they should pay corporation income tax on that in luxembourg. but do they? the rental income coming in, the companies that are receiving that are then borrowing huge amounts of money from other companies which are part of the blackstone group and when they borrow that money they have to pay
9:34 pm
interest on it and those interest payments destroy any profitability in those companies. and the end result is no taxes due? yes, because they are borrowing money from themselves they can claim a tax deduction on that. according to public documents, the luxembourg companies in the saint enoch‘s structure they'd just a few thousand pounds a year in taxes and guess what? if blackstone sell the place on, thejersey what? if blackstone sell the place on, the jersey trust structure will allow them to avoid capital gains tax as well which could run into tens of millions. it seems like a com plete tens of millions. it seems like a complete charade. glasgow shopping centre generating cash and rental income here in scotland but that cash flows tax—free out of and into luxembourg via the offshore tax havens where the st enoch centre is effectively owned, jersey. deloitte, the architect of the structure, declined to comment. it's not the
9:35 pm
first time blackstone used these methods. this is chiswick park, a business centre in west london. blackstone bought it in 2011 and in tax advice this time from accountancy firm pwc there was no messing about. it states the tax structure was designed to mitigate where possible taxes on acquisition, to minimise ongoing income, corporate, withholding and other taxes in uk, jersey and luxembourg and to minimise tax on exit from the uk, jersey and luxembourg perspective. the language is quite shocking in places because it is so clear and blatant or b its intention is. blackstone sold most of chiswick park to the chinese government in 2014 for a profit of up to £300 million. it would appear they followed the pwc advice to the letter and paid zero in stamp duty, next to nothing on the millions of
9:36 pm
pounds of rental income this place generated and zero on capital gains. not a bad bit of business. pwc told the bbc, the advice... ina in a statement, blackstone said... so whilst back stone —— blackstone was the beneficiary of the structure, it was appleby who implemented it and that is what they do. they will create companies for you in tax havens, even provide the
9:37 pm
directors. there are thousands of exa m ples of directors. there are thousands of examples of this in the data and some specifically involve one of scotland's's biggest industries. if figure —— ithaca energy. they were in the process of buying a share in this in the d12, sbf one which is a floating oil production vessel and the company agreed a deal for £18 million to buy half of fpf1 but days before the transaction they decided they needed a shell company and a tax haven. so why would a canadian firm with its headquarters here in aberdeen need a bermudan company to hold its stake in an oil platform operating in the north sea? the paradise papers could have the answer. ithaca's aberdeen office tells appleby and it is important
9:38 pm
that our tax position that the company is managed and controlled from bermuda." seems clear enough. ithaca need the company to operate properly for tax reasons. apple leak has agreed to provide a local director. —— appleby. there are reasons to head to bermuda other than for its sun—kissed beaches. perhaps it generous tax laws. there are no taxes on profits or income but does the company had any real business in bermuda or if it'sjust a show for tax purposes? —— is it just a show. take this minute of a company board meeting injune 2012. it says two ithaca exec gives called in from canada and the uk and appleby‘s bermudan director failed to attend and a board meeting in bermuda with apparently nobody in bermuda. we asked an international tax expert for his opinion.|j
9:39 pm
bermuda. we asked an international tax expert for his opinion. i think the reality of the matter is that this whole show was being run from aberdeen and not bermuda at the only reason to have a bermuda company is because it is a tax haven and they can get interest into it without paying taxes and whenever the canadian company wants to withdraw the money they can do without paying taxes. i can't see any other reason to have this extra company in the structure. fpf1 only started producing oil this year and because of tax breaks it will not pay uk tax until 2020 anyway so what's the point? i think the point is looking forward. you want to plan ahead with these things because doing it when you are profitable is harder. for a few weeks we have been trying to get some answers from ithaca aboutjust exact what the purpose of this bermudan company was. they say it has nothing to do with tax. 0ur evidence suggests otherwise. i am
9:40 pm
going to go and knock on their door and see if somebody will talk to us. hello. mark daly, abc ‘s gotland. how are you. mr thomas? that's me. we're trying to find out what the purpose of the bermudan company is. the bermudan company exists in order to hold an asset that we have a share offer. why hold it in bermuda? it is convenient for future deals that we will be doing. it is a complex business. is it a real company? absolutely. nothing really happens, you have board meetings but even board meetings with nobody physically present and people calling in from abroad. that would suggest, would it not, that the company is being managed and controlled from outside of bermuda? mark, you are concocting a story and
9:41 pm
i don't think it's helpful to create a story based on partial information. maybe you could give us the full picture then. the information we have suggests very strongly that the bermudan company was created for tax purposes. no, that's not true. i think we've said very clearly that that is not true. you can choose to believe us or not, that's up to you. have a good day. all the best, thank you for speaking to us. ina in a statement, appleby said it work in highly regulated jurisdictions and advises clients on legitimate and advises clients on legitimate and lawful ways to conduct their business. within the millions of documents in this league, we can see it is not just documents in this league, we can see it is notjust corporate giants who have used appleby to help them try to avoid tax. 0ur have used appleby to help them try to avoid tax. our data revealed even middle sized property developers we re middle sized property developers were getting in on the act. this is
9:42 pm
in edinburgh. in 2009, a number of addresses on this street were sold bya group addresses on this street were sold by a group of investors who included two well—known edinburgh property developers called alex watts and kristen stewart. the deal was done for a healthy profit —— chris stewart. the data shows more than £5 million in public was made, three quarters of a million to stuart and 1.3 million to alex watts. the data suggest they try to take their cut off shore to the isle of man where appleby created a land trust called the palmerston partnership. an internal memo set up the purpose of the scheme. a uk property development in scotland utilising a land trust partnership structure to mitigate any tax due. roberts from the sale had been distributed amongst the partnership. —— profits. here is how it worked for the edinburgh pair. isle of man vehicle
9:43 pm
was critical beep a must in cloths partnership. two offshore trusts we re partnership. two offshore trusts were created, one for each man. the profits from the land deal flowed into the partnership in the isle of man and from there the cuts were moved into their trust of which they and their families were beneficiaries. and it gets more complicated. appleby set up two more companies to act as trustees. these we re companies to act as trustees. these were supposedly independent. the staff then sign of the series of loa ns to staff then sign of the series of loans to companies registered in scotla nd loans to companies registered in scotland which are controlled by stuart and watts. what does all that mean? i needed an expert and dalits simpson is one of the leading tax qcs in the country. peshmerga philip simpson. struck —— philip simpson. struck -- philip simpson. certainly the document i have seen strongly
9:44 pm
suggest that the motive for using it was to avoid using uk tax. it is difficult to come to any conclusion other than that the purpose of it was avoiding uk tax. in what was a fairly aggressive manner. but in 2012 the taxman came calling. a deeply unhappy mr watts ripped to appleby expressing concern about how the structure had been managed which could weaken any position which he said was looking to attack wherever they could. seemingly worried hmrc will see through the scheme, he writes... in layman ‘s terms, the taxman caught up with them. that's what it looks like. i suppose if one put it ina
9:45 pm
looks like. i suppose if one put it in a colloquial manner, one might put it like that. appleby documents suggest the pair had at least initially avoided more than £1 million in tax from the profits so i had a few questions for mr watts. hello, mark daly, bbc scotland. i've got a few questions for you, do you mind? i would actually, yes. i would like to ask you about your offshore trust. we never ask you some questions. we have written back and been very reasonable but i think what you're doing is pretty unethicalfrom a what you're doing is pretty unethical from a journalistic guideline. i would unethical from a journalistic guideline. iwould ratherjust leave it there. you haven't actually a nswered it there. you haven't actually answered our questions. about the profit at the palmerston partnership, £1.3 million was your share and how much tax on that did you pay? you have written to us and we have responded to you. was it to avoid tax? the answer is no comment, we have given you a statement and what you're doing is unreasonable
9:46 pm
and unfair. mr watts' spokesperson said he was a positive tax contributor who had always lodged his tax returns and he said that... mr entered into opening cooperative discussion with hmrc to establish any potential tax due on a retrospective basis. mr stewart buddha spokesperson said all packs have been paid in full and any retrospective payments paid ahead of timetables discussed with hmrc and she added there was no case to answer, that hmrc was in possession of all the relevant facts and no tax was owed to hmrc. the key to the palmerston partnership was the isle of man. stories about the island come up again and again in the paradise papers. i am here to investigate one of them which involves a billionaire and private jets. the aviation business is clear
9:47 pm
the big part of what appleby does in the big part of what appleby does in the isle of man and the trouble is that it the isle of man and the trouble is thatitis the isle of man and the trouble is that it is not illegal, it is legal but only available to people with enough money to pay the right lawyers and accountants to do it is for them. in june 2012 there was much excitement in the office behind me because appleby had been contacted me because appleby had been co nta cted by me because appleby had been contacted by a very exquisite swiss aviation company called execujet. could you provide some directors for us? set up an isle of man company? and can you do it today? we will try our best, said appleby. the firm even waved some of its usual background checks to guarantee it closes the deal, perhaps because the owner is one of the richest men in the world, dermot desmond, best known as the largest single shareholder of the biggest bubble tea m shareholder of the biggest bubble team in scotland with an estimated
9:48 pm
fortune of around £2 billion. he is familiar with offshore, his 35% sta ke familiar with offshore, his 35% stake in southwark is held in gibraltar and he is also no stranger to controversy. —— in celtic. matt cooper has written extensively about him. he came to prominence in the 19805 him. he came to prominence in the 1980s and he was regarded as a somewhat brash and flash figure. you don't become a billionaire unless you are absolutely aggressive in making sure you make as much of it as you can from your businesses and you keep as much of it for yourself. mr desmond's luxuryjet you keep as much of it for yourself. mr desmond's luxury jet firm you keep as much of it for yourself. mr desmond's luxuryjet firm had offices all over the world so why did they need appleby to make them an isle of man company? this internal memo states exequet had taken swiss tax guidance and found out that having their swiss headquarters at them —— is the make money on the insurance policy has a negative tax consequence as they would need to pay 85% levy under swiss law. exequet would like to set in the isle of man —— would like
9:49 pm
to pay a 5% levy. by switching to a brass plate company set up by the appleby, exequet swerves up to $190,000 a year in swiss taxes just like that but that's not all. exequ et like that but that's not all. exequet also receives a brokerage feed back from its insurers every year but this is classed as income and should be taxed in switzerland. appleby can see to that as well. in another memo they write, "this is a low risk structure that has been set up low risk structure that has been set up to receive monies due to exequet under the insurance policies on the group aircraft. by having the money is paid into the isle of man entity, exequ et is paid into the isle of man entity, exequet are not required to pay swiss tax on the income of around 2296. swiss tax on the income of around 22%. we expect to receive two payments per year of approximately $600,000." for exequet to get the
9:50 pm
tax benefits of being based in the isle of man has been managed and controlled from there but there only employs there are the directors appleby provided and it seems switzerland was calling the shots. this e—mailfrom switzerland was calling the shots. this e—mail from head switzerland was calling the shots. this e—mailfrom head of it switzerland was calling the shots. this e—mail from head of it clearly instructs appleby to transfer more than half $1 million to the bank account in switzerland. my understanding, having read the legislation, is that if individuals in switzerland are making all the decisions from a swiss point of view, the isle of man company may be resident in switzerland for tax purposes. if it is resident in switzerland, then despite the structure that has been put in place, stamp duty is due on the insurance premium paid and swiss corporation tax is due on the money received back from the insurance broker. so the swiss taxman might have something to say about up to
9:51 pm
$1.3 million in tax it seems to have been avoided by mr desmond's company. would you say this was aggressive tax avoidance in operation? i think it would certainly be reasonable to describe this as aggressive given what appears to be a lack of any economic substance to the isle of man company. i had hoped somebody at exequ et company. i had hoped somebody at exequet isle of man's operas which is here at appleby could provide some answers. i got some questions about some companies registered here. exequet, palmerston partnership. if you write down your details i can pass them on. nojoy. perhaps mr desmond himself could provide some answers. we knew there would be one place his own private jet would be buying into a jab in the evening and we try to catch up with him. were you aware that when the company was under your control that exequet was using a shell company in the isle of man as a tax
9:52 pm
avoidance vehicle? we never use the tax avoidance vehicle. what was the isle of man exequet company for them? if isle of man exequet company for them ? if not isle of man exequet company for them? if not avoiding tax? you will have to educate yourself. exequet asked appleby to set up effectively asked appleby to set up effectively a shell company in the isle of man. so that the company would not be liable for swiss aviation tax. if that's not the case, mr desmond? you are incorrect. could you put me right then? i'm not duty-bound to educate you in how we run our affairs. we have written several letters to you to try to get clarity on what the situation is and what it looks like, the isle of man exequet company was a tax avoidance vehicle which allowed exequet to avoid more
9:53 pm
than $1 million in tax. that is absolutely wrong. maybe you could tell us what the isle of man company was for is not to avoid tax? that is our own business. every company in the isle of man is not for avoidance of tax. a final question, did exequ et of tax. a final question, did exequet isle of man help exequet eag avoid tax? absolutely not. thank you for your time. mr desmond was not prepared to give too much detail about the isle of man company but what he did say was that it was not a tax avoidance vehicle but i'm afraid, in terms of what the isle of man company was actually four, i'm none the wiser. the next day, mr desmond wrote me a letter. he added... appleby told the bbc it had
9:54 pm
thoroughly and vigorously investigated the allegations and they were satisfied that there was no evidence of any wrongdoing either in the part of ourselves or our clients. the paradise papers have given us an insight into the secret world of the rich and powerful. and we have learned many of them do not appreciate the scrutiny. tax loopholes will close and regulations will tighten but firms like appleby are paid millions to find the gaps. the impact of this story is being felt across the globe but the offshore world continues to determine much of what goes on and it remained shrouded in secrecy,
9:55 pm
until the next big leak that is. thank you forjoining me. if you have been watching the weather for the week ahead you will know i have been talking about next week with a great deal of uncertainty but we are beginning to firm up ideas and will come to that in a moment but firstly ican speak come to that in a moment but firstly i can speak with some certainty about wednesday. we are expecting to receive a cold, frosty start, right through the heart of the country, and a bit further south and east more cloud and some rain through the day keeping temperatures up. in the north—west, eventually more cloud and wind and rain coming in from the atla ntic and wind and rain coming in from the atlantic but where we had the forced to start we will keep the sunshine for much of the data. not doing much for much of the data. not doing much for the temperature but a contrast to what many had on tuesday. through wednesday night we will push those systems further to the south and east, and at least the cloud is going to help keep the temperature is up. they will not be any scraping of the car windscreens on thursday
9:56 pm
morning. those systems will take time to take the cloud away towards the continent and noticed the artists bras —— of the isa guha has. the wind is coming in —— the isobars. it will not be a bad day behind that on thursday, some blustery showers in the north but elsewhere some brightness in the afternoon with temperatures in double figures in many places. this is friday, notice those isobars moving more towards the north—west, importing slightly fresher air and perhaps a brighter day on friday but the temperature is beginning to suffer as a consequence, certainly in the north, and that system is still lurking close to the southern counties of england and wales. 0vernight, this is a pulse of tropical air coming across the southern counties of england and
9:57 pm
wales and that is where we start the weekend but many of us, for the bulk of the weekend, will be in something a good dealfresher of the weekend, will be in something a good deal fresher than of the weekend, will be in something a good dealfresher than something from the tropics. we will end up with a north—westerly wind sweeping down across the country. the weekend ina down across the country. the weekend in a nutshell, bright and breezy, some showers in the mix and it will feel decidedly colder than the middle part of the week, especially on sunday. this is saturday, still a fairamount of on sunday. this is saturday, still a fair amount of cloud close to the systems in the south but the shot of cold north—westerly screaming down across central and eastern parts of the country and notice those isobars. the high—pressure toppling in from the atlantic tends to settle things in the west but it will be blustery in the northern isles and on the east coast. top temperatures despite the sunshine of seven, eight
9:58 pm
or9 despite the sunshine of seven, eight or 9 degrees. at the start of next week, the major players are beginning to show their hand with this high—pressure trying to dominate but not quite doing enough to keep those frontal systems at bay also sometimes they will be tied in with low pressure systems which will try to come in but the high will be doing it stuff and keeping those lows primarily to the north where we will see the bulk of the unsettled weather. further south, will see the bulk of the unsettled weather. furthersouth, not wall to wall sunshine but much more settled and maybe some chilly nights to tonight at ten: new revelations in the paradise papers — prince charles's offshore investments and questions about a conflict of interest. the leaked documents
9:59 pm
reveal his duchy estate secretly invested in a friend's environmental firm in bermuda. the prince has long campaigned on green issues, but he went on to lobby for international rule changes that the company stood to profit from. there's a conflict of interest between his own investments of the duchy of cornwall and what he's trying to achieve publicly. 0fficials deny prince charles spoke out simply to further his investments. also on the programme tonight: the former welsh government minister, carl sargeant, has been found dead just days after he was sacked over misconduct allegations. the british motherjailed in iran — fears that borisjohnson has made her plight worse by saying she was training journalists there.
10:00 pm

35 Views

info Stream Only

Uploaded by TV Archive on